Office supply gap opens opportunity for older modernized buildings

Office take–up amounted to 447,000 sqm in 2015, with 90 percent of the demand targeting class A buildings, according to a report published by Colliers International. Of the 3.2 million sqm of office space currently on the market, 69.5 percent is class A. The supply was above average as well last year. With some 190,600 sqm completed, 2015 was 26 percent above the 10-year average. Supply is expected to drop to 32,600 sqm this year, the lowest it’s been since 1993. Colliers foresees continuing demand for class A space but points to the fact that 53 percent of offices on the market are more than 10 years old.

“We see an opportunity for landlords to modernize older office properties,” said Ondřej Vlk, head of research at Colliers International Czech Republic, adding that even buildings completed in the 90s and 2000/2005 can now be successfully leased if landlords invest into new technology, common areas and office interiors. “Owners who begin the recovery now can significantly improve their occupancy rates, achieve a fair market rent and in turn increase the value of the asset.”